The Dynamics of the NEW Software Industry: What it Means for Software

Companies

Ken Wasch, President, SIIA

Current State of the Industry

History of Software• 1950

– Mainframe: IBM

• Mid-1960s– Mini-computers: DEC, Wang

• 1981– PCs: IBM, Microsoft, Compaq

• 1995– The Web

Basic Parameters

• Packaged software• ERP• Simple EULA• Perpetual License• Volume Discounts• Electronic Licenses• ESD• Service/Maintenance

This is all about to change….

What is a Software Company?

The Network exacerbated the complexity of the Industry.

The direction of the Industry has shifted.

Evolution

client server

Network computingNetwork computer

Web server

Database server Application server

A NEW Software Industry is Being Born!

• New Models• New Ways of Thinking• New Companies• New Practices• New Form Factors

New License Terms……

• New Models…

New Models

ASP: The Predecessor

New Models

Software as a Service: The Movement

Software as a Service

• Not an ASP

• Clients access services (software) through a web browser form any web-enabled appliance.

• How do you license this kind of service?

New Models

Web Services: The Future

New Models

Open Source: The Disruptor

Open-source to patents

There is a growing tension between the rise of open-source and the expanding options for propriety control– Open-source’s GPL is at one end of the

IP spectrum– Patents are the other end

Why?

• Piracy Issues• Change the Relationship with the

Customer• Customer Demand• New Form Factors (Mobile, Handheld)• New Revenue Opportunities

• What does it mean for Licenses?

• The industry has entered a period in which it is no longer the technology itself that is central, but the value it provides to businesses and consumers.

Irving Wladawsky-Berger, IBM

The Future of Licensing

• The License Disappears• Shift to Maintenance and Service• Non-Perpetual Licenses Costs• Monthly Subscriptions• Usage Based• One-Time Licenses

The Future of Licensing

• Free + Services• License + Extra Service• Modularization• Per User• Selling across Devices

Current Examples

• Salesforce.com: User-Based

• Sun Microsystems: Project Orion

• IBM: Utility Computing

• Microsoft: LiveMeeting

• Microsoft: Software Assurance

• Intuit: Product Activation

Things to Consider….

• What works for you? • Work with the flexibility• How does it open new avenues? • What is the TCO? • How can you shift resources? • How can you be more dynamic?

Pervasive Computing

When every appliance can be web-enabled, communicating seamlessly with other devices, the shape of the industry changes drastically,

Ken WaschPresident

Software & Information Industry Association

+1.202.289.7442kwasch@siia.net

www.siia.net